Labour sets out plan to change minimum wage so it reflects cost of living

Angela Rayner says workers should not receive a ‘fake living wage they can’t live on’

Labour has put forward plans that could bump up low-paid workers’ wages by hundreds of pounds (AFP via Getty)

Low-paid workers could earn hundreds of pounds more a year under Labour plans for the minimum wage to factor in the cost of living. The opposition party said it wanted to scrap lower rates for young adults so that all over-18s would be entitled to the same living wage.

The proposals come as Britons face a cost of living crisis driven by soaring energy bills alongside rocketing inflation, which is now at 10 per cent. Meanwhile, wages are failing to keep up with the pace of increase.

Angela Rayner, Labour’s deputy leader, said her party would create a “genuine” national living wage for workers rather than a “fake living wage they can’t live on”.

The minimum wage rose from £8.91 to £9.50 an hour in April for Britons aged 23 and over – a 6.6 per cent increase.

Younger adults are entitled to lower rates, at £9.18 an hour for 21- and 22-year-olds and £6.83 for those aged between 18 and 20.

Labour said that if it were in power, it would instruct the Low Pay Commission, an independent body that advises the government, to set a minimum wage that covers the cost of living.

It did not give exact details of how much wages would increase by under its plans, saying that it would leave that to the commission.

Angela Rayner promises her party would provide a ‘genuine’ living wage (PA Wire)

The Living Wage Foundation, a campaigning organisation, makes its own calculations based on an everyday basket of goods, and urges employers to pay people outside London £9.90 an hour. That would give someone over 23 working an average 36-hour week an annual pay rise of around £770.

“Working people contribute so much to the wealth of our country, and it is only right they receive a fair day’s pay for a fair day’s work, not a fake living wage they can’t live on,” Ms Rayner said.

Rachel Reeves, the shadow chancellor, said: “Many employers already pay a real living wage, and that is to be commended. But they should not be undercut by those who don’t, which is why we need a level playing field.”

Real wages fell at a record rate between April and June this year, according to official figures released this week.

Additional reporting by Press Association